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Japan's Prime Minister Yoshihiko Noda (L) stands next to his cabinet ministers raising their hands and shouting 'banzai' (cheers) after the dissolution of the lower house was announced at the Parliament in Tokyo November 16, 2012.

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TOKYO (Reuters) - Japanese politicians drew battle lines on Friday ahead of a Dec 16 election likely to return the long-dominant Liberal Democratic Party (LDP) to power under a conservative former premier, raising concerns about the future of Tokyo's already chilly ties with Beijing.

Prime Minister Yoshihiko Noda urged voters to shun jingoism after rival LDP leader Shinzo Abe, who has vowed not to yield in a territorial row with China, said he would build a strong Japan.

The election for parliament's lower house is expected to usher in Japan's seventh prime minister in six years, but is unlikely to fix a policy stalemate that has plagued a country struggling to cope with an ageing population, a declining manufacturing sector and the emerging power of China.

"This fight is about restoring Japan. We will regain a strong economy," Abe, whose party is tipped to come out on top in the poll, told a news conference after the lower house of parliament was dissolved.

"We'll restore foreign policy. We will strongly appeal to voters on the need to restore the Japan-U.S. alliance, which was badly damaged by the Democratic Party government," said Abe.

"That will help us defend our beautiful country, territories and national interests," he added, echoing an agenda he floated during his 2006-2007 term as prime minister.

Seeking to draw a distinction with the LDP, Noda framed the vote as a choice between moving forward with reform or turning back the clock. The LDP ruled Japan for most of the past six decades before Noda's Democratic Party of Japan (DPJ) won a landslide victory three years ago.

Noda warned of the dangers of just talking tough in diplomacy. "Healthy nationalism is necessary, but if one goes to extremes, it becomes jingoism," he told a news conference."

"Diplomatic and security policies influenced by such an atmosphere are a danger for Japan."

Noda, Japan's sixth prime minister in six years and the third since the DPJ's historic election win, had promised three months ago to set a date for the vote in exchange for opposition support for his pet policy to double the sales tax by 2015 to curb massive public debt.

Policies in the spotlight include the role of the central bank in reviving an economy slipping into its fourth recession since 2000, the future of nuclear power after last year's Fukushima disaster, and whether Japan should take part in the Trans-Pacific Partnership, a U.S.-led trade pact that Noda favours joining but which would open up protected markets in Japan.

"When politics get chaotic, it is always the people who are sacrificed," Toyota Motor Corp President Akio Toyoda, who heads the auto industry lobby group, told a news conference.

"We want a leader who can understand the difficulties that the people are going through, someone who can lead to create a country and society where those who work hard are rewarded."

QUALIFIED TO LEAD?

The LDP said on Friday in a draft of its economic platform that it would do its best to beat deflation, which has dogged Japan for years, and tame the strength of the yen, the source of constant complaints from the country's exporters.

It said it would achieve nominal economic growth of 3 percent or more and revise the Bank of Japan law in a step critics worry would weaken the central bank's independence.

In recent days Abe has called on the central bank to print "unlimited yen" and set interest rates at zero or below zero to boost the economy, remarks that sent the yen falling the most against the dollar since central bank intervention in 2011.

But policy differences between the main parties are in many cases a matter of nuance and degree, so some say the biggest election question will be who is best qualified to lead.

"The main issue will be whether we should get rid of the 'incompetent' DPJ and bring experienced people (the LDP) back," said one ruling party lawmaker, speaking privately.

"Or whether because the LDP created the mess, we should have a stronger more intelligent leader, like Hashimoto," the lawmaker added, referring to popular Osaka Mayor Toru Hashimoto, who leads the small Japan Restoration Party.

The DPJ took power in 2009 pledging to pay more heed to the interests of consumers and workers than corporations and give control of policy to politicians rather than bureaucrats.

Hopes of meeting those pledges faded after the first DJP premier, Yukio Hatoyama, squandered political capital in a failed attempt to move a U.S. airbase off Japan's Okinawa island.

Successor Naoto Kan led the party to an upper house election defeat in 2010 and then struggled to cope with the huge earthquake, tsunami and nuclear crises in 2011.

With the party's prospects dim, DPJ lawmakers were scrambling to defect. The Asahi newspaper said at least nine of its 244 members in the 480-seat lower house planned to bolt.

Smaller parties are scrambling to try to join forces despite major gaps in their policies and competition over who would lead the bigger bloc.

The LDP looks likely to win the most seats in the lower house poll but a lack of voter enthusiasm makes it uncertain whether the party and its former junior partner, the New Komeito party, can win a majority.

If not, the LDP will need to seek another coalition partner either from among a string of new, small parties, or even what is left of the DPJ after the election.

That latter option is less unlikely than it might seem at first blush. The LDP and DPJ lack stark policy differences, especially since Noda - a conservative on both fiscal and security matters - took the helm of what began as a centre-left party in 1996. The party's membership has been whittled down by a series of defections over Noda's policies.